The European Bank for Reconstruction and Development (EBRD) has asked Wageningen Economic Research to carry out a study on the Croatian fruit and vegetables sector and value chain to make a contribution to the enhancement of the position of growers in the value chain. The study shows that the Croatian fruit and vegetables farming sector has opportunities in the development of the domestic supermarket channel and tourism markets. In the short run, growers will benefit from improving yields, efficiency and product quality. Increasing supply volumes and hence marketing efficiency can also be achieved by improved cooperation between farmers and further land reform measures. A good competitive position on the domestic market is a necessary pre-condition for increasing exports. In the longer term, in order to be able to develop export markets, the sector will benefit from the development of a buyers network, marketing, EU quality labels, and export logistics.

The study assess the competitiveness of the fruit and vegetable sector and suggests specific recommendations for further development. It also provides insights in market, trade and investment opportunities. A focus is applied to a limited number of crop specific case studies. In Uganda the production of fruit and vegetable is gaining importance. Despite agricultural practices being weak, farmers in Uganda can make a reasonable profit margin from their farm plots. In addition, key performances indicators of Uganda compared with Kenya show that most products for the domestic and regional markets are very competitive in terms of quality, price and yield.

Enhancing the sustainability of agriculture requires a better earning capacity for farmers. Besides government (i.e. taxpayer) support for sustainable production, consumers will have to buy the more expensive sustainable products and the extra price they pay will have to be passed on to the producer through the chain. This will require sustainability agreements between farmers and chain parties, complementary to existing initiatives and labels. This study examines the scope for lawful private sustainability agreements. Under the cartel prohibition in the EU Treaty, the possibilities are limited and insufficiently workable in practice. The CMO regulation offers several derogations to the cartel prohibition, which provide opportunities for farmers and farmers' associations to make sustainability agreements. In the 2021 CAP review, that space has been extended with an article (210a) added specifically for this purpose. This offers great opportunities. The agreements must be ambitious, exceed existing legal requirements and must be made by or with farmers (mutual agreements within the retail or processing industry without participation of farmers remain under the cartel prohibition). Another condition is that the agreements are indispensable to achieve the stated sustainability objective (no greenwashing). In addition, other derogations in the CMO regulation can be used, in particular for recognised producer organisations (Art. 152) and other farmers' associations (Art. 209) in combination with value distribution clauses (Art. 172a). Better prices for farmers for sustainable products mean higher costs for consumers for their food. However, making agriculture more sustainable also leads to societal benefits and financial space to compensate citizens who cannot afford higher food prices.

Ornamental horticultural products are taxed at a reduced VAT rate in the Netherlands (9% rather than 21%) as well as in 14 other EU countries. Increasing VAT would have a negative impact on turnover and employment in the supply chain. These calculations show that a VAT increase in the Netherlands would lead to a loss of around €200 million in turnover in the ornamentals sector at wholesale prices (-1.6%). If VAT were to be increased in other EU countries too, this would have a particularly significant impact on the Netherlands’ exports and thus on primary production. In this scenario, the drop in turnover for the ornamentals sector (at wholesale prices) would be €930 million (-7%). The expected impact on the government’s VAT revenue would be partly offset by fewer flowers and plants being bought, and in the shorter term by a decline in tax receipts and social insurance premiums from businesses and employees, along with an increase in unemployment benefits being paid out.